Quiz: Week 5 Checkpoint This Question: 1 pt Consider a home mortgage of S225.000

Question

Quiz: Week 5 Checkpoint This Question: 1 pt Consider a home mortgage of S225.000 at a fixed APR of 6% fr 15 years. a. Calculate the monthly payment b. Determine the total amount paid over the term of the loan. c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest a. The monthly payment is s (Do not round until the final answer. Then round to the nearest cent as needed) b The total amount paid over the term of the loan is Round to the nearest cent as needed.) c Of the total amount paid, % is paid toward the pnncp al, and Round to one decimal place as needed.) 1% is paid for interest. Enter your answer in each of the answer boxes O Type here to search

Explanation / Answer

a) This can be solved using the Present value of annuity Present value of annuity is = [(P*(1-(1+r)^-n)/r)] Present value of annuity is = Mortgage loan = $ 225,000/. r is Rate of Interest per month = (6%/12)= 0.50% per month n is no of months = 15*12 = 180 months P is Monthly payment =? 225000=[(P*(1-(1+0.005)^-180)/0.005)] 225000=[(P*118.5035147)] P is = (225000/118.5035147) P is = $ 1,898.68 /. Approx. Payment per month = $ 1,898.68 /. b) Total amount paid over the loan period is = (Payment per month * Total no of months) Total amount paid over the loan period is = (1898.68*180) Total amount paid over the loan period is = $ 341,762.02/. Approx. c) Total interest = Total payment over mortgage period - Loan amount Total interest = (341762.02-225000) Total interest paid is = $ 116,762.02/. Approx. Principal portion of payments is = $ 225,000/. Principal portion on total payments is = (225000/341762.02)*100 Principal portion on total payments is = 65.84% Approx. Interest portion on total payments is = (116762.02/341762.02)*100 Interest portion on total payments is = 34.16% Approx.

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